The parent owns 3 properties in California, a principal residence, a rental property and a vacant land.
Here’s an example that will clarify how the $1 million is excluded and when and how much is reassessed. Transfers of non-principal residence is limited to the $1 million per parent.
Proof of eligibility, including a copy of the transfer document and/or trust may be required. If a claim is not timely filed the exclusion will be granted beginning with the calendar year in which you file your claim.Ĭomplete all of Sections A, B, and C and answer each question or your claim may be denied. If a claim form has not been filed by the date specified in the preceding sentence, it will be timely if filed within six months after the date of mailing of the notice of supplemental or escape assessment for this property. A claim form is timely filed if it is filed within three years after the date of purchase or transfer, or prior to the transfer of the real property to a third party, whichever is earlier. Filing Requirements:Ī claim form must be completed and signed by the transferors and transferee and filed with the Assessor. Therefore, a transfer may qualify for exclusion when a partial interest in the property received is transferred to a third party prior to an application being filed. Transfer of Real Property to a “Third Party”: For filing proposes, a transfer of the real property to a third party occurs when all the real property received is transferred to someone other than an original transferee or transferor. Third Party: A third party is any person or entity that is not a transferee or transferor in the transfer between the parents and children. Trusts: A transfer to or from a trust is treated just as a transfer to or from the trustor personally, provided the trust is revocable.ĭate of Death of Decedent: The date of any transfer between parents and their children under a will or intestate succession is the date of a decedent's death, which must be after Novem(the effective date of proposition 58). Legal Entities: Transfers directly between legal entities owned by parents and children are not entitled to the benefits of this measure. These transfers are coordinated State-wide under the million dollar limit. Therefore, one parent can transfer $1 million of other property and the other parent can also transfer $1 million of other property for a total combined exclusion of $2 million. $1 Million Exclusion: The $1 million exclusion for other property applies for each transferor. In addition, the $1 million limit does not apply to the transferor's principal residence. Principal Residence: Proposition 58 does not require that the parent or child use the transferred property as his or her principal residence. Gift/Purchase: Transfers such as a gift or purchase between parents and children are excluded with a completed Prop. The $1 million is the factored base year value, not the fair market value.ĭefinition and Terminology specific to Proposition 58:Ĭhild: Children include the following: sons and daughters, sons-in-law and daughters-in-law, stepchildren, and children adopted under 18. The $1 million exclusion applies separately to each eligible transferor. Transfer of the first $1 million of real property other than the primary residences.Transfer of principal residence (no value limit).Transfers of real property excluded from reassessment by Proposition 58 are: Proposition 58 is codified by section 63.1 of the Revenue and Taxation Code.
Proposition 58, effective November 6, 1986, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property between parents and children. Learn more by reading our fact sheet here. The new owner's taxes are calculated on the established Proposition 13 factored base year value, instead of the current market value when the property is acquired. Proposition 58 allow the new property owners to avoid property tax increases when acquiring property from their parents or children.
However, if the sale or transfer is between parents and their children, under limited circumstances, the property will not be reassessed if certain conditions are met and the proper application is timely filed. In the State of California, real property is reassessed at market value if it is sold or transferred and property taxes can sometimes increase dramatically as a result. Please visit the Proposition 19 resource page for more information. ALERT: In November 2020, California voters passed Proposition 19, which makes changes to property tax benefits for families (effective February 16, 2021).